Delek's Indian Real Estate Plans Revealed

Delek Real Estate is closing in on a huge deal in India with expectations of double-digit returns. The company, headed by Ilik Rozanski, is near an agreement at the end of last week with Indian real estate firm Sigron.

The basis for the project will be a 50-50 joint venture traded on the stock market in India. Sigron will provide the real estate assets, mostly land and projects under construction, at a value of between $550 million and $600 million.

Delek will provide the firm with $100 million in a first stage, and will be entitled to half the profits.

Rajesh Nair, the controlling owner of Sigron, predicts that the venture will offer returns of at least 40% over five years. If the company reaches this target, Delek will provide another $100 million a year, until its investment equals that of Sigron.

The question of the actual return will be based on the firm's results on the stock market as well as an annual financial examination.

Delek signed a memorandum of understanding with Sigron two months ago over housing and commercial construction. Sigron has land reserves in India of 30,000 acres (120,000 dunams), of which 13,000 acres are approved for development.

Sources at Sigron estimate the value of the land at over $1 billion, and they are in excellent locations, including in Mumbai, Pune and Bandra. The company has the possibility of building hundreds of millions of square meters immediately.

Delek Real Estate declined to comment on the report.